Annual results presentation 2013 3 February 2014 1 of 31 / February 2014
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Contents 1. Highlights of the year 2. 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions 3 of 31 / February 2014
Highlights of the year On track to meet the goals of our Strategic Plan 2012 Recapitalisation and clean up the balance sheet The Turnaround Year 2013 2014 IN Developing our commercial model PROCESS 4 of 31 / February 2014
Highlights of the year 2013: THE TURNAROUND YEAR PROFITABILITY AND CAPITAL 1 RECAPITALISATION COMPLETED, 2 RESTRUCTURING PLAN EXECUTED GENERATION TARGETS MET Commercial momentum picked up IT integration and workforce agreement Recurring profit improved Branch network restructuring completed two years ahead of schedule Profit in line with expectations Additional non-strategic divestments Improved liquidity, sharp increase in capital Investor and customer confidence Recapitalisation of Bankia completed in Bankia 5 of 31 / February 2014
Highlights of the year ORGANISATIONAL RESTRUCTURING AND SIMPLIFICATION… Branch network Organisational structure NUMBER OF RETAIL BRANCHES AREA HEAD OFFICES REGIONAL HEAD OFFICES CLOSURES 17% 58% 81% 100% PROGRESS 35% YoY 33% YoY - 38% reduction reduction 3,000 2,800 2,400 2,100 1,900 ORIGIN Q1 2013 Q2 2013 Q3 2013 Q4 2013 Branch closures completed two Organisational structure simplified years earlier than planned 6 of 31 / February 2014
Highlights of the year …REGAINING COMMERCIAL MOMENTUM… Sales volume “Dar Cuerda” programme Products sold (thousands) More than € 14,900 million of new loans granted in 2013. + 22.0% 80% went to self employed, SMEs and corporates. 466 382 Credit market shares DEC 12 DEC 13 Total OSRs SMEs and corporates Products sold per employee (# per month) 9.56% 9.22% + 48.8% 5.97% 5.55% 44.8 30.1 DEC 12 DEC 13 Dec 2012 Dec 2012 Nov 2013 Nov 2013 Source: Bank of Spain Productivity levels have improved 7 of 31 / February 2014
Highlights of the year …PROFITS IN LINE WITH EXPECTATIONS… (1) (2) Efficiency ratio ex trading income Net profit * - 10.7 pp 63.3% 62.1% 60.1% 54.2% 52.6% 818 608 4Q12 1Q13 2Q13 3Q13 4Q13 (1) Net profit does not include hibrids exchange result and fiscal adjustments (2) Real figures adjusted by the subordinated loan of BFA to Bankia canceled on 23 rd of May * Recurring efficiency ratio ex trading income and exchange differences. Calculated with pro forma data Efficiency ratio improved significantly, bringing our profit into line with projections 8 of 31 / February 2014
Highlights of the year …SIGNIFICANT IMPROVEMENT IN LIQUIDITY AND CAPITAL… LTD RATIO (%) EBA CORE TIER 1 % -5.0 pp 120.4 120.9 118.2 116.7 115.4 9.62% 11.71% + 209 pbs Organic Generation DEC 2013 PF DEC 2012 4Q12 1Q13 2Q13 3Q13 4Q13 Solid liquidity position and more than 200 bps of capital generated in the year 9 of 31 / February 2014
Highlights of the year …WITH THE CONFIDENCE AND BACKING OF THE MARKET The share of international Share performance vs. IBEX 35 investors in the Bank’s 200,0 180,0 capital went from 3.8% to 160,0 more than 10.4% in seven 140,0 months 120,0 100,0 First issue of senior debt BANKIA IBEX 35 80,0 since the Group was 60,0 created, with an international demand of Included in Ibex 35 in Dec 13 85% 10 of 31 / February 2014
Contents 1. Highlights of the year 2. 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions 11 of 31 / February 2014
2013 Results Bankia Group financial performance Profit after tax in 2013 ex exchange of hybrids amounts to € 608 million . Results Net interest income was up for the third quarter in a row at € 2,567 million , with operating expenses down 17% year-on-year. Non-performing loans (ex transfer of refinanced loans to non- performing under new regulations) were down for the fourth quarter in Asset quality a row, giving a cumulative reduction of around € 1,200m for the year. The coverage ratio on the loan book stands at 8.2% of total loans and 56.5% of non-performing loans. The commercial gap has been further reduced and the LTD ratio has improved to 115.4%. Liquidity & solvency The Bankia Group increased its capital ratio by more than 200 bps to reach an EBA Core Tier 1 ratio of 11.7% . 12 of 31 / February 2014
2013 Results Bankia Pro Forma Income Statement – € m The following pro forma income statements exclude the cost of the subordinated loan by BFA to Bankia in the amount of € 109m in 2012 and of € 89m in Q1 and € 53m in Q2, which was cancelled on 23 May. In 2013, profit from discontinued operations, in the amount of € 158 million, is included in profit from the sale of investees and other profit. 2012 2013 Diff € Diff % A 3,198 2,567 (631) (19.7%) Net interest income B Gross income 4,119 3,772 (347) (8.4%) C Operating expenses (2,293) (1,905) (388) (16.9%) Pre-provision profit 1,826 1,867 41 2.3% D Provisions and other expenses (23,907) (1,287) - - of which maximum provision for litigation (230) Taxes 2,982 28 - - E of which activation of monetisable DTAs 230 Profit after tax (19,098) 608 - - 13 de 31 / Febrero 2014 13 of 31 / February 2014
2013 Results Net interest income – Bankia A Quarterly trend of net interest income Loan yield vs. cost of deposits € m 2,567 3,198 (1) (1) 2.99% 2.69% 601 (1) 633 643 690 (1) 2.63% 2.49% 2.46% 109 1.95% +14.8% 1.86% 1.70% 1.67% 1.54% 53 89 1.04% 0.95% 0.93% 0.83% 0.79% 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 2012 1Q13 2Q13 3Q13 4Q13 Credit yield Deposits cost Customer margin (1) Actual numbers, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May. Client yield stabilised. The positive trend in net interest income was consolidated during 4Q 2013, driven by the fall in The cost of customer deposits decreased the cost of deposits and asset repricing policies. significantly during 4T 2013. Bankia Group data. € m 14 of 31 / February 2014
2013 Results Fee and commission income - Bankia Fee income generation is stable Mutual Funds evolution € m +27.2% 936 8,216 992 6,460 225 225 237 249 2012 1Q13 2Q13 3Q13 4Q13 Dec 2012 Dec 2013 Mutual funds market share increased from Fee volume up 5% in the last quarter, despite 4.52% at the end of 2012 to 4.82% in Dec large number of branches closed during the year 2013 Source: Bank of Spain Bankia Group data. € m 15 of 31 / February 2014
2013 Results Gross income – Bankia B Trend of gross income € m 4,119 (1) 3,772 (1) 957 958 945 912 132 100 65 (27) +13.7% 939 880 858 826 4Q13 2012 1Q13 2Q13 3Q13 Rest (2) Net interest income + Fee income (1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase (2) Exchange diff. + Dividends + Equity method + Other operating income Basic banking business contribution up 13.7% compared to the first quarter Bankia Group data. € m 16 of 31 / February 2014
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